Bharat Forge slips on foreign brokerage downgrade

Shares of Pune-based Indian multinational company, Bharat Forge have dropped nearly 4% at Rs 899 on the BSE after foreign brokerage CLSA downgraded the stock to “Sell” from “Buy” citing weak operational outlook.

Bharat Forge's operational outlook has weakened notably on a worsening outlook for industrial exports, continued drop in new truck orders in the US, and slow recovery in its domestic industrial business, the brokerage reasons for downgrade.

According to reports, the brokerage has reduced fiscal year ending March 2016-fiscal year ending March 2018 earnings per share forecast by 7-26%, factoring in slower growth across businesses. It expects valuations to contract sharply, given weakening growth expectations.

The brokerage, however, likes long-term structural story of BFL given its improving capabilities, growth from new businesses (aerospace and passenger vehicle exports) and large headroom to grow industrial exports. However, it believes that benefits of these will play out gradually in coming years while simultaneous cyclical weakness across key end segments will have a significant impact in the near term.

The stock opened at Rs 886 and touched a low of Rs 876.55 on the BSE. A total of 39,455 shares changed hands on the BSE so far.